Buffett bets on big pharma and bails on banks

Berkshire Hathaway takes new stakes in Pfizer and Merck and increases its stake in AbbVie and Bristol-Myers Squibb

Warren Buffett
Warren Buffett

Warren Buffett is betting on big pharma as the sector swings up on the development of a Covid-19 vaccine and therapeutics.

His company Berkshire Hathaway took new stakes in Merck and Pfizer during the third quarter, while also adding bets on AbbVie and Bristol-Myers Squibb, according to a new regulatory filing.

Meanwhile, Mr Buffett’s conglomerate continued to cut stakes in banks including Wells Fargo and JPMorgan Chase.

Berkshire started snapping up the health stocks just months ahead of a disclosure from Pfizer and BioNTech that their vaccine protects most people from Covid in news that sent Pfizer stock soaring. Merck has also been pushing ahead with therapies for the virus.

The bets give Berkshire more exposure to pharmaceutical companies as officials prepare to ramp up efforts to distribute a Covid vaccine whenever one is approved. 

Mr Buffett’s company had stakes valued at more than $1.8bn each in AbbVie, Bristol-Myers Squibb and Merck at the end of the quarter, and about $136m in Pfizer. Berkshire omitted some confidential information with its routine regulatory filing.

The 90-year-old has been cautious during the pandemic, saying in May that his then-record cash pile was not that big when considering the worst-case possibilities.

Mr Buffett has since deployed cash in Japan and into natural gas assets, and bought back Berkshire shares.

His friend Bill Gates, a former Berkshire board member, has been donating through his foundation to help fund vaccine efforts.

The Berkshire boss dumped airline stocks and sold financials earlier in the crisis. His company continued to pare bank holdings in the third quarter, trimming its Wells Fargo stake and slashing its JPMorgan investment by 96pc.

Berkshire has been chipping away at its Wells Fargo stake in recent months after more than three decades holding onto that bet. It owned about 127m shares at the end of September - a marked shift for an investment that once ranked as Berkshire’s biggest.

Berkshire also took a $276m stake in T-Mobile US during the third quarter.